The Bell About OGDC - Trough Cash Recovery Makes Debt a Likely Option- Elixir Securities Limited

Karachi -- Dividends resumed in 3Q; while earnings disappointed: OGDCL's 3QFY11 EPS at PKR4.09, up 25% YoY lagged Elixir Securities Limited expectations on account of lower oil revenues coupled with higher amortization expense. Payout resumed in 3Q with 2nd interim DPS of PKR1.5, taking 9MFY11 payout to PKR3.0, down 24% YoY. According to Elixir Securities Limited, receivables continue to rise as OGDC taps the debt option: Receivables rose by PKR19bn during 3QFY11, as OGDC's cash recovery remained a mere 53% of 3Q sales during the quarter. Elixir Securities Limited channel checks suggest OGDC is considering the possibility to take long term debt for funding the scheduled development projects.